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Monday, 17 September 2012
Page: 7050

Senator FIERRAVANTI-WELLS (New South Wales) (15:47): In the 2011-12 federal budget submission the Aged Care Industry Council stated:

A snapshot of the industry at the start of 2011 does not depict a sustainable system: only 40% of residential aged care services are operating in the black ...

Regrettably, in recent years this has been the story of ageing and the aged care sector—a sector that is well and truly in crisis. This is a sector that, despite five years of reviews and inquiries into it, has had broken promises from those on the opposite side. Not only has Labor failed on some of its promises; but it has also failed to take the hard decisions. It has not undertaken the vital structural reform that is necessary for the aged care sector to ensure its sustainability and viability in the future.

I would like to focus my comments today on the Productivity Commission report entitled Caring for older Australians. This is a report that the government sought. This is a report that received 500 submissions and then, when the draft came out, another 500 submissions were provided to the Productivity Commission. Indeed, it was very much awaited with great anticipation by the sector in the hope that the government would actually undertake some reform. We welcome this report. At the time of its referral, we were critical not because of the Productivity Commission but because so many reviews of the sector had already been undertaken, and the sector was very much suffering from review fatigue.

The coalition have been calling for reform in the sector for a long, long time, and we did so at the last federal election. Indeed, we set out our framework for real reform through the first ever four-year aged care provider agreement with the sector, including consideration of the Productivity Commission's report. After the Productivity Commission released its report, it took the government some eight months before it made its announcements. And when those announcements came, they were made with typical fanfare—yes, the spin doctors were well and truly hard at work. Whilst the announcements on 20 April this year, with the headline figure of the $3.7 billion, sounded impressive, the net spend was only $577 million. There were major gaps in the government's response—notably, the huge administrative burden under which the aged care sector currently suffers. Nothing has been done to address the vital changes that are necessary in that area.

But like many of Labor's announcements, the devil is in the detail. Our response has been cautious because we knew that, when we looked at the fine print, that would be where the real problems would be. And of course, there they were—$1.6 billion will be ripped out of the Aged Care Funding Instrument over the next four years. We also have the establishment of another bureaucracy, more bureaucracy, in a sector that is already wallowing in red tape and bureaucracy. We have Labor ignoring the bulk of the Productivity Commission's recommendations. Indeed, we will be lucky if five to eight per cent of what the Productivity Commission recommended will be picked up by the government. There is also the $1.2 billion workforce compact. And, of course, I have traversed the issue of the ACFI changes that are supposedly being made because of allegations of rorting.

We still have not seen those assertions about the sector substantiated by the minister. Only 40 per cent of residential aged-care providers are operating in the black, and now the world's biggest carbon tax providers are justifiably feeling that they have been kicked further. This was a problem of the government's own making. The government, as usual, failed to properly consult with the sector. The minister is hiding behind this confidential process, allegedly saying that these changes were discussed as part of the ACFI monitoring process—but of course that is a confidential process and, as this came out of the blue, aged-care providers were caught very much on the hop.

Taking $1.6 billion out of aged-care funding is going to have a massive impact. This was seen in the report by Leading Aged Services Australia, which says that aged-care providers will face a $750 million revenue shortfall over the next 2½ years, with statistics such as 89 per cent of aged-care facilities facing unrecoverable losses, the average reduction in care funding from between $20,000 and $23,000 per resident and average loss to facilities of around $125,000.

Then we have the establishment of the Aged Care Funding Authority—another bureaucracy which is going to dictate prices, bonds and a whole range of measures which are totally inconsistent with what the Productivity Commission was indicating, although typical of this government: trying to infer that providers were charging the big $2 million bonds. There is only one $2 million bond in this country, and we know because we have been informed about that by the sector in Western Australia.

I would like to make some comments on this workforce compact. The minister says that $1.6 billion will be taken out of ACFI but $1.2 billion is going to be redirected to a so-called workforce compact. Despite the protestations of the minister, these two things are inextricably linked. Currently, providers receive a conditional adjustment payment of 8.75 per cent of their subsidy to meet certain workforce obligations. Under the proposed compact, unless providers have an enterprise-bargaining agreement with their workers they cannot access the funding under the compact.

The providers will still be required to meet the same workforce obligations, but unless they enter into an EBA they will be unable to access the funds. And who, or what, is the default agent for aged-care workers? It is the union. There are three key unions in aged care: United Voice, the Australian Nursing Federation and—of course—the HSU. As a result of the Thomson scandal and the problems with the HSU union membership has clearly suffered considerably, with a dramatic reduction in membership numbers.

Therefore, we are seeing that forcing providers to enter into enterprise-bargaining agreements means that more aged-care workers will be forced to join the union. To me, this looks very much like a dirty little backdoor deal at the expense of aged-care workers to get more people to join the HSU—another backroom deal.

I call on the minister to respond. I have said this publicly on a number of occasions, and Minister Butler has still not said anything. He has not responded to this. It is obvious what he is doing. This is supporting the non-Kathy Jackson side of the HSU equation. For Minister Butler, who obviously has his own ambitions, this is what it is all about.

I say to the minister: this is at the expense of aged-care workers who have already gone through the scandal and who have already seen their precious contributions abused in the way that Mr Thomson, Mr Williamson and others have used them. Now they have you cynically using this as a backdoor way of propping up the union and basically saying to providers: 'If you don't get your workers into the union, then you are not going to access funds.' If the minister really wants to help the sector, why doesn't he give them back the money as a conditional adjustment subsidy like under the system that is already established? No! He is putting conditions on it because that is the real object of this compact. It has nothing to do helping providers; it has everything to do with helping the HSU. It is little wonder that the aged-care sector has absolutely no faith whatsoever in this government and in this minister.